Rounding Error In Computer Code Leads To $26,000 Overcollection By Labor Department

Jun 8, 2017

Vermont’s Department of Labor accidentally overcollected $26,000 in unemployment contributions from businesses across the state because of a rounding error coded into the state’s software in 2008, officials announced Thursday.

Labor Commissioner Lindsay Kurrle said the problem was found because her department is working with officials in Idaho to modernize the system the state uses to manage unemployment payments. Idaho has a custom-built system for managing such payments, and Kurrle said Vermont is working with Idaho in order to avoid duplicating work that’s already been done.

“Rather than having a system built specifically just for Vermont, the federal government encouraged us to participate in a consortium so that we could piggyback on their success, so to speak,” Kurrle said.

Officials in Vermont speak with their counterparts in Idaho daily, Kurrle said, and it was in one of those conversations earlier this week that the rounding error was found in Vermont’s code.

“They were talking about how they were going to code the system for our interest that we charge on past-due accounts,” Kurrle said. “The reason that comes up is because Idaho obviously has, maybe, a different interest rate. So we have these conversations, you know, how are we going to code it, what’s the right number? And when the number was tossed out there … somebody decided to recalculate … and they found that when they did their quick calculation it appeared that we were over-charging.”

Employers in Vermont are required to contribute to unemployment payments for qualifying former employees. By law, Vermont’s Department of Labor charges 1.5 percent interest every month on unpaid contributions from employers. Kurrle’s staff found that a math error was causing the department to charge a slightly higher interest rate on months with 31 days.

“What we learned when we looked into the code is that if it’s a 30-day month, it comes out to exactly 1.5 percent, which is exactly what we are by statute required to charge people who are past due on their payments,” Kurrle said. “But if you have a 31-day month, which we have seven of, it’s over, because you’ve got an extra day in there, the way the code is in there.”

Kurrle said department officials determined that the relevant section of code was changed in 2008, but she said it’s unclear if the error also existed before that change. She said staff turnover since 2008 makes it impossible to figure out who made the change that year.

According to calculations from the labor department, the resulting errors meant that a business with a past-due balance of $1,000 for an entire year would have been overcharged by $2.50 for interest for that year.

Kurrle said the problem with the code has already been fixed and businesses will no longer overpay, but the department’s staff has a lot of work ahead of it in order to calculate reimbursements for businesses that were overcharged. That effort is further complicated by the fact that the Department of Labor only has records for the past three years, so businesses that overpaid before 2014 will have to provide their own documentation in order to be reimbursed for any overpayments.

“For anybody prior to 2014 who suspects they might have overpaid, it’s going to be a lot of a lift. Because we’re going to require that they have documentation to show that they had past-due accounts, and interest due, and that they made payments on it, because we don’t have records that far back,” she said. “So we absolutely want to make people whole, but it’s definitely, it’s going to be a lift.”

Kurrle said she doesn’t know exactly how many businesses have been overcharged as a result of the rounding error, but she expects the labor department will end up writing many small checks as opposed to a few large ones. To illustrate that point, she said that a business that has a past-due balance of $100,000 for a whole year – “We might’ve had one. That is like worst case scenario,” she said – the department would owe $250 to that business.

That means that the estimated $26,000 that the Department of Labor has collected due to this error is likely owed to dozens of businesses across the state, though Kurrle said staff are still working to get more exact numbers.

Kurrle said businesses that overpaid on unemployment contributions since 2014 will receive a refund of their overpayments without having to contact the Department of Labor. She advised businesses that believe they overpaid before 2014 to call the Department of Labor’s employer assistance line at 1-877-214-3331.